The Board of Trustees v. James Island Plastering, Inc.

Background

The plaintiff was the Board of Trustees for four Northern California trust funds: the Health and Welfare Trust Fund, the Vacation-Holiday Trust Fund, the Pension Trust Fund, and the Training-Retraining/Apprenticeship Trust Fund. The Board sued in its capacity as trustee, asserting claims under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA).

In 2003, James Island Plastering, Inc. entered into a memorandum agreement with a local union affiliated with the Northern California District Council of Laborers. The agreement bound JPI to a master agreement and successor agreements, including the 2012–2016 and 2016–2019 agreements. Those agreements required employer contributions to certain trust funds and incorporated the relevant trust agreements. The trust agreements allowed the Board to audit JPI’s records to determine whether contributions were properly made.

JPI provided some documents requested for an audit but did not respond to the complaint. The clerk entered JPI’s default on July 16, 2019. The Board then moved for default judgment and asked, among other things, for an order requiring a full audit beginning January 1, 2014.

Court’s analysis

The court first found that JPI had been properly served through substituted service under the applicable federal and California rules.

Because JPI had defaulted, the court treated the complaint’s factual allegations—other than allegations about damages—as true and considered the evidence submitted by the Board. Applying the factors used to decide whether to enter default judgment, the court found that the factors favored the Board. The court reasoned that denying relief could leave the trust funds without a remedy, that the Board was seeking an audit rather than immediate money damages, that JPI had not identified any dispute about material facts, and that JPI’s failure to defend made a decision after a contested proceeding impractical.

The court also concluded that the Board had adequately stated claims for relief. The agreements and trust documents supported the Board’s position that JPI agreed to make contributions and submit to an audit. The court stated that ERISA permits a fiduciary to enforce an employer’s obligation to make contributions to a multiemployer plan and that the Board had established a right to an audit.

Relief ordered

The court granted the Board’s motion for default judgment. It granted the Board’s request for injunctive relief requiring JPI to permit a Board-designated auditor, during business hours and at reasonable times, to enter locations where JPI’s records were kept and examine and copy its books, records, papers, and reports. The audit was limited to determining whether JPI had made full and prompt payment of sums required to be paid to the trust funds.

The court denied the Board’s request for a permanent order requiring JPI to submit all required monthly contribution reports. The court found that the submitted papers did not clearly establish that JPI had failed to submit those reports, as opposed to failing to submit to an audit. The court stated that this denial did not prevent the Board from seeking relief later if JPI failed to provide required reports.

The court granted the Board’s request for $9,673.25 in attorney’s fees and $779.92 in costs. The court found those amounts reasonable and noted that the agreements and statute provided for them. The court did not award contribution damages at that time; the Board had not waived its ability to seek damages after the audit, subject to the court’s discussion of post-judgment procedures.

The court stated that it retained whatever jurisdiction was available if the Board filed a motion under Federal Rules of Civil Procedure 59 or 60 to alter or amend the judgment after the audit. The clerk was instructed to enter final judgment, and the order disposed of Docket No. 20.